Bangkok--23 Jun--KPMG
“Companies that thoroughly prepare for an initial public offering will be in the best position to benefit from a listing on the Yangon Stock Exchange”, said Managing Partner of KPMG in Myanmar Yasuhide Fujii.
Companies that undergo pre-IPO testing and preparation will be in the best position to maximize the value of their business, raise the bar of transparency in doing business and complement the pace of economic growth in Myanmar through a vibrant and credible stock market.
“Myanmar companies who are considering a listing on the exchange should first ask if an IPO is the right choice and at the right time given their stage of development and prospects. Running a comprehensive pre-IPO test can help companies evaluate both timing and readiness for a listing,” said Mr.Fujii.
At KPMG’s latest Myanmar Business Forum: Getting Ready for the 2015 Yangon Stock Exchange, KPMG shared the key components of a pre-IPO readiness test. KPMG advocates the use of a pre-IPO framework that helps businesses consider and address critical issues for a listing. The approach is aimed at assessing a company’s group structure, international standard accounting, internal risk environment, financial reporting practices and strategic plan. From the reporting and risk perspective, a company needs to be certain that internal controls, compliance procedures, corporate governance policies and accounting systems can meet the demands of the exchange and applicable regulation.
The factors assessed in the pre-IPO test are all critical at the company and broader exchange level. An optimal operating structure combined with sound corporate governance and transparency will enhance shareholder value, mitigate risk and ultimately provide investors with confidence in the Yangon exchange.
Mr. Fujii went on to say that “there is also a large amount of detailed information processing that a company needs to diligently go through in order to prepare to become a quality listed firm. Robust preparation, ongoing governance and transparency will not only increase the number of good securities on the exchange, but will accelerate international investor appetite in the local capital markets.
Mr. Fujii added that in this early stage of capital market development, companies with the highest potential to list on the Yangon Stock Exchange are likely to be in banking, agriculture, consumer, infrastructure, construction, manufacturing products, and real estate sectors.
Myanmar’s only other experience with a stock market was the Rangoon Stock Exchange which operated in the 1930s and was later closed down due to World War II. Stock trading was revived in late 1950s but was later closed down again due to the internal political situation.
The current market, which has two companies with tradable shares, is an over the counter (OTC) market called the Myanmar Securities Exchange Centre. This OTC market is a joint-venture between the state-owned Myanmar Economic Bank and Japan’s Daiwa Securities Group. This OTC market is planned to be replaced by the Yangon Stock Exchange in October 2015.